WTI Stuck in Limbo as Markets Await Details on Potential Peace Deal

**ANALYSIS ON OCTOBER FUTURES | ROLL ADVISED

WTI Crude Oil futures capped off last week with another day in the red. The driving force throughout the week and on Friday was the Trump – Putin meeting at 3:30pm Friday to discuss ending the war in Ukraine.

President Trump posted on social media following the meeting that a deal had been reached, all that was left was for President Zelensky to agree. We haven’t seen much solid information on the details of this “deal”, and markets are in limbo as European and Ukrainian leaders head to the White House.

The President will meet with European leadership and President Zelensky starting at 2:30 cst today, but a preliminary meeting with Zelensky will start at 12 cst. It may take some time before we have any solid information on what was discussed and if a peace agreement was reached.

Volatility will likely remain amplified through this meeting, and the return of Russian crude oil to the markets at scale still presents a fairly bearish outside catalyst.

Markets opened the Sunday night section lower, but we didn’t get much by way of fireworks. The lows going back to early July have held, and the Chinese open saw a continued, but marginal, continuation of selling pressure.

While we’re looking for buy spots, the downside risk remains very elevated. We like risk-defined strategies until we can get through this period of heightened uncertainty.

It should be noted that last week’s CFTC report showed that managed money was near a record net-short position. This will likely keep a lid on selling in the immediate term and adds to the probability of a short covering rally.

Technical Analysis:

Technically, futures held the lows seen on early July last week, and overnight selling in relation to the news flow was fairly marginal. While we like picking buy spots, the chances of sharp, news-driven downside moves are still in the cards.

Once we get through this agreement and period of uncertainty, we’ll have a better idea of how things are looking. Markets are not moving in a way that fits within our regular trading framework of Fundamentals + Technicals = Good Trade methodology. Markets are trading based upon a Trump-driven peace deal, which skews risk in all directions.

The large net-short position held by speculators adds to the chance of a short-covering rally.